Graydon Carter Cheers Jamie Dimon’s Downfall, Introduces the ‘Carter Rule’

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Photo: Patrick McMullan/PatrickMcMullan.com

Way back in April 2011, Vanity Fair honcho Graydon Carter wrote an editor's note in which he took JPMorgan Chase chief Jamie Dimon to task for, essentially, being a silver fox.

"Jamie Dimon is tall. He’s fit. For a banker, he’s nice-looking," Carter wrote. "And he’s got that head of fluffy white, unbankerish hair. You could argue that Dimon’s single greatest asset is that he doesn’t look like Dick Fuld."

Dimon's good-for-a-banker looks and compelling biography, Carter wrote, had allowed him to escape the financial crisis unscathed, dodging the wrath of the American people despite JPMorgan's seeming role in many of the same activities that made villains of other bank executives.

In the July issue, Carter addresses Dimon's downfall, focusing on the $2 billion (and growing) trading loss that stemmed from JPMorgan's chief investment office and the oversized hedges of the London Whale. The losses have jeopardized Dimon's formerly gold-plated reputation, intensified the debate over bank regulation, and given his critics a reason to celebrate.

Pen heavy with Dimonfreude, Carter writes:

When JPMorgan Chase announced earlier this spring that the firm had lost $2 billion in high-risk trading, C.E.O. Jamie Dimon said that the trades had been in violation of “the Dimon Principle.” He didn’t explain what this was — no doubt expecting the rest of us to know, much as we are aware of Newton’s law of gravity. I have a general rule when companies admit to a loss. Perhaps I will call it the Carter Rule: no matter how big a loss a company is willing to cop to, to get to the absolute truth you should probably double the figure and, just to be safe, double it again.

Carter says that Dimon called him after his April 2011 piece came out to explain the mechanics of the banking system — and presumably, how JPMorgan had actually not behaved like other banks during the crisis.

Dimon talked to him like a third-grader, but Carter still didn't follow:

He spoke slowly, his seminar punctuated by the sort of weary sighs you would expect from a headmaster trying to explain quantum physics to a particularly dim student. The poor man certainly had his work cut out for him — when it comes to finance I am, at best, hopeless.

Still, Carter is not going to let a little basic financial literacy get in the way of his victory lap. He writes of his erstwhile financial tutor: "The pedestal that he so carefully constructed for himself is now vacant."